Good morning, and welcome to United Community Banks' First Quarter Conference Call. Hosting our call today are President and Chief Executive Officer, Jimmy Tallent; Chief Operating Officer, Lynn Harton; Chief Financial Officer, Rex Schuette; and Chief Risk Officer, David Shearrow. United's presentation today includes references to core pretax, pre-credit earnings and other non-GAAP financial information. For each of these non-GAAP financial measures, United has provided reconciliation to GAAP in the Financial Highlights section of the news release and at the end of the investor presentation. Both are included on the website at www.ucbi.com. Copies of today's earnings release and investor presentation for the fourth quarter were filed this morning on Form 8-K with the SEC, and a replay of this call will be available on the company's Investor Relations page at ucbi.com. Please be aware that during this call, forward-looking statements may be made by United Community Banks. Any forward-looking statements should be considered in light of risks and uncertainties described on Page 4 of the company's Form 10-K and other information provided by the company in its filings with the SEC and included on its website. At this time, we will begin the conference call with Jimmy Tallent.

Good morning, everyone, and thank you for joining us for our first quarter earnings call. Overall, I'm pleased with our results as we continued to make significant progress on a number of strategic fronts. I'm particularly pleased with the improvement in our credit measures, which impacted first quarter earnings favorably and are moving us steadily toward precrisis levels. First quarter net income was $11.8 million or $0.15 per share. This included $360,000 in severance charges. For the third consecutive quarter, loans were up compared to both the preceding quarter and the same quarter a year ago. Core transaction deposits grew by $81 million for the quarter or 10% on an annualized basis. Our provision for loan losses was $11 million, down $3 million from the fourth quarter and down $4 million from a year ago. Net charge-offs decreased by $2.1 million and by $3.5 million from a year ago to $12.4 million. That is the lowest level since the first quarter of 2008. Our allowance for loan losses remained strong at 2.52% of loans. Our nonperforming assets at quarter end were $113 million, down 12% from the fourth quarter and represented 1.65% of total assets. Core pretax, pre-credit earnings were $26.4 million. Our net interest margin was 3.38%, down 6 basis points from the fourth quarter and down 15 basis points from a year ago. And all of our capital levels remained strong at quarter end. Now those are the highlights. Now I want to get more into the drivers of our first quarter results and also talk about strategic initiatives to improve performance and grow earnings. I noted that our core pretax, pre-credit earnings were $26.4 million for the first quarter. That is down $2.7 million from the fourth quarter. More than half of the decrease resulted from 2…

[Operator Instructions] And our first question is from Kevin Fitzsimmons of Sandler O'Neill. Kevin Fitzsimmons - Sandler O'Neill + Partners, L.P., Research Division: Maybe my first question is just to get an update on the Fletcher credit and where that stands in terms of getting your hands on the collateral to be able to dispose of that. And then further into that, Jimmy, maybe you can walk us through some of the main things that are going to be critical to reversing the DTA allowance, and then maybe an update on your anticipate timing for TARP repayment.

Let me address the Fletcher -- Kevin, it's David. I'll address the Fletcher situation. The carry balance on that relationship is right at $42.5 million. We did, in the first quarter, reappraise all the assets, and we took a small charge in the quarter. It's in our charge-off numbers to true it up down to 80% of current appraised value. As far as the actual relationship itself goes without getting into a lot of detail, we do have advertisements running on certain properties in the relationships we have default which has occurred. And so we'll just begin working through that process at this time. And that's really pretty much the update. Kevin Fitzsimmons - Sandler O'Neill + Partners, L.P., Research Division: So basically, David, the money that was in escrow to pay for the loan, that has run out and now it's in default?

That's correct.

Kevin, Rex. Well, I'll answer your next 2 questions. With respect to the DTA recovery, as Jimmy indicated, that's imminent, we think, coming. The key drivers have always been reflective of credit improvement that's reflected in our provisioning and our outlook with respect to charge-offs and credit metrics. And again, the quarter is right on track and probably, as Jimmy indicated, even a little more positive than we anticipated. So that's moving right in line. I think the other side then is a balance with our forecasting process, working with PwC, looking at that, looking at the outward quarters, and we're in that review process with PwC at this time. So we continue to see it moving in the right direction. And as Jimmy indicated, by mid to late this year, we would expect that to come in. And the third item you had, I don't understand the term anymore. You mentioned TARP, but that's been paid off, so it's no longer... Kevin Fitzsimmons - Sandler O'Neill + Partners, L.P., Research Division: The Former TARP.

I know, and I'm only kidding. But again, we look at it. We're well capitalized, as you see on Page 15 in our investor presentation. I think we're all focused relative to the cost of our debt and equity, we think it's too expensive. We see that. We're looking at it, reviewing it. And we think over the next 12 to 18 months, we believe that we can lower those costs anywhere from $0.10 to $0.15 EPS. The first thing in getting there -- and again is relative to we need to get the MOU lifted. And again, we see progress on that every quarter with the regulators and meet with them on a regular basis. That's going to be critical, I think, as well as the DTA recovery as part of that. Those 2 things allow us then to have dividend capacity at the bank without restriction other than state approval, and having dividend capacity continues in the same process with respect to the capital markets. That allows us to obtain either institutional or retail base, either debt or equity, in the market with a debt-equity rating at a lower cost also. So we see all of those coming together. I think from a priority basis, as we look at it, we have several items there from a priority basis. One, either that we'll refi or pay down through dividend capacity with a focus on dividend capacity availability. Trust preferreds, we have $48 million of our $53 million approximately. That's anywhere from 8% to 11%. So that's high on our list. We want to reduce that. We have $35 million of sub-debt at 7.5%. We have $17 million again of another preferred stock that we originally issued to Elm Ridge that is callable next October. That's at 10%, which…

David, right now, the ratio is 49%. It dropped 1 basis point from last quarter. I don't know what that magic number is. I do know that certainly, our focus and desire is to have that number moved out in the 30s.

Our next question in queue is from Michael Rose of Raymond James. Michael Rose - Raymond James & Associates, Inc., Research Division: I'm just wondering. Can I get a sense? With the margin probably expected to compress from here but some mid-single digit loan growth and it looks like securities balance has increased this quarter, how should we think about dollars of NII this year relative to last year and the size of the balance sheet?

When you're looking -- Mike, when you look at net interest revenue, as Jimmy indicated, part of the downward trend on a linked quarter basis, as all banks have, is fewer days in a quarter. So part of that would be a picked up 1 day difference next quarter, 2 by the quarter after that. So there's a little bit of pickup just naturally with that, that will come through net interest revenue. As Jimmy indicated, margin compression still continues for all of us out there with respect to both our lending, new and renewed pricing even though it's holding in well above 4%, as we have in the charts. But we still have pressure with new loans coming in. The renewals are higher, the new is lower. But again, there's still pressure on that continuing. The securities portfolio, if you look at the securities portfolio -- and again, we comment on that, but 1/3 of that is floaters. So we're trying to position the excess liquidity, which is roughly about 1/3 of that portfolio, keeping in floaters. We take a little bit of less interest on that, but again we significantly reduce our interest rate risk longer term as well as duration in these calculations. So I think we have additionally some pricing impact and is positive at midyear with respect to the HELOC program. That's $125 million on -- at introductory rates. Besides the repricing in the second and third quarters, that helps again on -- during the year to help move up the margin a little bit. But again, I think overall, we'll still see a little bit of edging coming down, as Jimmy indicated in his prepared remarks, on a linked quarter basis, probably 2% to 4% -- 2 to 4 basis points. Michael Rose - Raymond James & Associates, Inc., Research Division: Okay, that's great color. I'm sorry if I missed some of the prepared remarks. And then as a follow-up, obviously credit has continued to improve here, and the credit-related expenses have continued to come down. How should we think about this level as kind of a run rate going forward assuming continued progress on credit?

With regard to the allowance specifically? Is that the provision? Is that what you're getting to? Michael Rose - Raymond James & Associates, Inc., Research Division: No, I guess the OREO costs. I assume that the provision will come down as a function of charge-offs.

Yes, yes. Well, I think in both cases, I think -- well, we've said through -- on the allowance first, we would expect, just because our factors are -- continue to drop down, that we'll see some under-provisioning going through the year, although, like we've said, we want to be conservative in our approach. But the economy is still fairly weak, and we still have, I would say, too high level of classifieds overall, although it's dropping and at a pretty good pace. So we -- what I've said in the past is I think this year, we'll -- we should target maybe an 80 to a 100 basis point provision by the end of the year. On the OREO costs, I think we'll see some drop there, probably not as rapid of a pace, only in the -- it's really a function of the amount of new foreclosure activity occurring. Now of course, with the default rate dropping as quickly as it did in the first quarter, new NPL inflow, that's a leading indicator. Now OREO, new foreclosures did drop this quarter, and I would expect that to continue to drop. But I think the pace of the drop on OREO expense would be a little slower. And maybe we're just under -- or $2.3 million, $2.4 million this quarter. Maybe we're down end of the year around $2 million, a little less possibly.

Our next question is from Jefferson Harralson of KBW. Jefferson Harralson - Keefe, Bruyette, & Woods, Inc., Research Division: Can you guys talk about some of these 27 projects that you mentioned, maybe 1 or 2 just as a flavor for the types of things you guys are doing to improve earnings?

Sure, Jefferson, this is Lynn. A couple of things that we're doing. One of the things is just improve the back-office processes, for example. So one of them, we have a centralized retail underwriting process going on that centralize retail underwriting. And also then, going from front end all the way to back to make that one process so it's far easier, both for our lenders on the front end, for our customers, and it's much more efficient. So to take out a lot of costs on that side. So that's one of them. We also got some sales training as one of our processes going on. So it's multiple processes really covering every aspect of the business. But probably, I'll just, well, sit down and go through some of those kind of individually with you because there's too much to go through on a question. But it really covers, as Jimmy mentioned, every aspect of the business. Jefferson Harralson - Keefe, Bruyette, & Woods, Inc., Research Division: And it's going to require significant hiring to make it successful?

No. Actually, that's one of the things we've been able to do, is bring down the staffing levels while we're also making investments. So as Jimmy mentioned, we've made significant investments, including in Greenville, while we've also been able to bring staffing overall down so -- partially because of these projects that we've got going on. So we're able to become more efficient, reinvest that -- those savings into these new initiatives. Jefferson Harralson - Keefe, Bruyette, & Woods, Inc., Research Division: All right, perfect. And I think this might be a -- Jimmy, why did -- and the last quarter, you gave a pre-pre goal. Is that goal, you think, still attainable? Or is it too tough an environment to hit significant pre-pre growth next -- this year?

Well, Jeff, so that's great question. And certainly, the first quarter was a little bit of a setback, but still I think we have to keep it in perspective, the revenue decline. We clearly see we're half of that. In our view it's seasonal, and we'd look for that to return in Q2. But if we really just kind of tear that apart, and let's look at the loan growth because, obviously, margin compression will continue. So the only way to grow interest revenue is to grow the lending side. Very pleased with what we see happening in Greenville. A very strong pipeline is developing. A new lender hired last quarter, a very, very strong commercial lender. And announcement of another one here in the next few days. And we're beginning to see, in some of our markets, some pickup in activity. And also, too, in fact, we're in discussions now with 2 different lending groups that's interested in joining United. So from the margin compression, the way we're focusing it, of course, is on increasing our lending opportunity. On the growing the fee revenue, again I know that we all are facing significant headwinds, but we are in the process of bringing in a new leader to drive our mortgage business. Clearly, we're running about 1/2 of where we should be. We do an exceptionally good job in our markets in North Georgia, Western Carolina, but we do believe there's real opportunities here in these metro markets. That's something that we're laser focused on, and we'll see that, I think, achieved this quarter as far as the leadership, though we were encouraged by the LOCs at the end of the first quarter, but certainly the mortgage business is going to ebb and flow some. We have new leadership in the advisory services, so we'll be adding brokers throughout the year. Another area in the fee revenue that we're very excited about is our customer derivative business. We saw probably close to $250,000 last quarter, and we are seeing that continue. Our HELOC repricing that we had mentioned, we'll see that beginning in Q3. So that will be a lift to the interest revenue, the 27 projects that we've talked about. I think we have clearly demonstrated that we can improve the efficiency with cost cutting. Certainly, over the last several years, we've been able to do that. With some of the reductions in those costs probably in 2013, those will be reinvested in revenue-producing opportunities. But clearly, achieving our goal will be a challenge, but I think we have a well-developed plan and certainly committed on the execution of it.

Our next question is from Christopher Marinac of FIG Partners.

Jimmy, I was wondering if could talk a little bit about the new loans of this quarter, the slide that you gave and mentioned with the last couple of quarters. Is the pipeline such that you can get back to this fourth quarter level or even exceed that as this next -- these next couple of quarters develop?

Lynn, would you like to take that?

Yes, sure. The -- January and February were probably as slow as we have seen, and then we really had a pickup in March. And so we're very confident coming into this quarter that we'll see an improvement in the second quarter over the first quarter. So really, I think it's probably just a January, February kind of approach or effect. As you look at the markets that are growing, you're -- it's what you would expect to see. We're seeing good growth out of Atlanta. We're seeing the pipeline build back up in coastal Georgia and in Knoxville. And as Jimmy has mentioned Greenville, just to give you some color on that, we went into Greenville in the fourth quarter with our initial hire. So just a small team. In the first quarter, we only closed $5 million, and it was just a line of credit with no funding. In the second quarter, we'll close $39 million with about $16 million in fundings. And in addition to that, we got a pipeline of $65 million, all of which we won't get, of course, but just to give you some color of why we think the coming quarters will be a little better. Again, not great guns but certainly better than the first quarter.

Got you. Okay, that's helpful. And I guess just following up for David, I know that, back on the classified assets and accruing TDRs, these are small numbers. But just curious, I don't know if there was any -- just sort of back on the small increase in both the performing classifieds and the accruing TDRs.

Yes, the -- we saw if the -- the only real negative credit at all in the quarter was a slight uptick in both accruing TDRs, a couple -- $2 million, $3 million and then about a $10 million increase in performing classifieds. On the TDR side, it's kind of interesting. The -- well really for that matter on both. You have a couple of dynamics that occur. One is frankly the default rate dropping as much as it did, you had less coming out going to either nonaccrual or to nonaccrual foreclosure out of both those buckets. So that's, I guess, a good positive on it. The negative, obviously we still had some new inflow come in. We had one relationship in the performing classified that really was -- it was about $10 million that came in, and that was the biggest bump that we had and really the most sizable, new classified loan we've had in some time. Beyond that, I'm really -- if you kind of pulled that out, I'm a lot more optimistic about what's going on, clearly, default rates dropping in both of those, whether it's TDR or in the performing classifieds. And so -- and I think -- so I think it was a little bit of an anomaly. I -- My expectation is we'll see drops in the second quarter, and we'll see as we go through. But that would be my expectations.

Okay. I was curious if the amount of $10 million relationships are limited, which I suspect they are.

Yes, very. That's unusual. We don't -- our portfolio is very granular, and that particular relationship had been on our watch list, a grade 7 in our shop, for some time, and we just felt like it needed to go down another notch. And so we moved it in. But yes, we -- our portfolio is very granular, and we do not have very many accounts over $10 million.

Our next question in queue is from Robert Madsen of Stephens.

Most of my questions have been asked, but I just wanted to -- just a quick housekeeping question. How much cash is currently at the holdco?

Cast at the holdco is around $54 million.

Our next question is from Jennifer Demba of SunTrust Robinson.

I jumped on late, so I'm sorry if I missed this. Jimmy, you made a lot of progress in reducing expenses. Do you feel like today's core run rate is something that can be improved upon given the investments you're making for revenue growth? Or do you think there's a step-down function from here?

Jennifer, I think we'll see that continue to reduce throughout this year with a number of these projects that's focused, of course, on the core expense base. You're not going to see the drop as we've seen over the last 2 years because we are beginning to reinvest with these opportunities of hiring some really strong revenue generators. But, I guess the best way I would answer that is, yes, I think we'll continue to see that kind of drop down on a lesser basis. Could possibly have a little bit of lumpiness but not big dollars simply on the timing as we bring people in and, as we all said, some of the costs.

Thank you. And with that, I'm showing no further questions in queue. I'd like to turn it back to Mr. Jimmy Tallent for any further comments.

I'd like to thank everyone for being on the call today and certainly your interest in United Community Bank. We look forward to speaking with you again after our second quarter earnings. And also, too, if you have any additional questions, please feel free to call any of us here today. Once again, I want to thank our team of bankers for their continued support, their execution as we go through a real challenging environment, but they've never ever take their eyes off of the number one ingredient, and that is our customers and customer satisfaction. So a big thank you to them, and thank you for being with us today, and we hope you all have a great day.